Gov. Brown: California's Budget Deficit Is Gone!

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Jerry Brown, Governor of California

Riding a wave of new tax revenue, California Gov. Jerry Brown on Thursday proposed a state spending plan that eliminates the deficit and provides $6.3 billion more in spending than the previous year.

The revenue has wiped away a budget deficit that stood at $25 billion when Brown took office two years ago and has created a slight surplus.

Brown proposed a $97.6 billion general fund for the 2013-14 fiscal year, an increase of 7 percent from the current year. The additional revenue will help him pour more money into public schools and universities.

California's spending plan for the coming fiscal year will rise by 7 percent, a powerful indication that the state that came to symbolize fiscal mismanagement during the heart of the recession is emerging into brighter days.

"California today is poised to achieve something that has eluded us for more than a decade -- a budget that lives within its means, now and for many years to come," Brown told reporters.

His budget includes a surplus of $850 million.

A rebounding economy coupled with new revenue from the higher sales and income taxes voters approved last November have put the nation's most populous state on a healthier financial trajectory, as it begins to turn the corner on an era of deep budget shortfalls and spending cuts to core state programs.

California's persistent budget woes came to symbolize the plight of states struggling through the recession as tax revenue declined steeply, leaving governors and state legislatures around the country little choice but to consider deep cuts or unpopular tax increases.

Brown took both approaches. He pushed an austerity message that forced cuts throughout state government during his first two years in office while persuading California voters to approve increases to the state sales tax and on income taxes on high-income earners.

Despite the new revenue flowing in, Brown has warned his Democratic colleagues who control both houses of the state Legislature that they must not overplay their hand and spend too freely. The governor wants to build a reserve fund for future downturns and focus spending on K-12 education, which already accounts for more than half the state's general fund spending.

Among Brown's priorities is creating a new funding formula for public schools. It would be aimed at giving school districts more control over spending and directing state money to the neediest children and poorest districts.

His proposal is expected to run into opposition from lawmakers representing more affluent regions of the state.

Cuts are still expected in some areas, such as the courts, while health care programs and social services are expected to see no increases in spending.

California's general fund spending hit a high of $103 billion before the recession decimated the state's economy and severely cut tax revenue for the state and municipalities. It dropped to a low of $87 billion during the 2011-12 fiscal year, requiring lawmakers to make deep cuts in a wide array of state services, including K-12 schools, higher education, the court system, and social services for the needy and disabled.